1 decentralization & quality of educ (channa, 2015)

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ED/EFA/MRT/2015/PI/11

Background paper prepared for the

Education for All Global Monitoring Report 2015

Education for All 2000-2015: achievements and

challenges

Decentralization and the Quality of Education



Background paper prepared for

Education for All Global Monitoring Report 2015

Decentralization and the Quality of Education

Anila Channa

April 2014

Abstract

Although decentralization has increasingly been advocated as a way of enhancing educational

quality, its potential in this area is still subject to some debate. This paper traces the popularity of

education decentralization over the past few decades to highlight that the post 2000 era has been

characterized by a deepening of reforms implemented earlier, an enhanced focus on school

decentralization interventions, and a notable increase in schemes in Africa. The article then

examines the empirical evidence on the relationship between decentralization and educational

quality to show that although the scholarship is limited in size and quality, a handful of rigorous

studies suggest that decentralization has the potential to enhance quality. Detailed case studies on

Mexico, Indonesia and Kenya supplement these two sets of analyses to not only showcase how

decentralization policies have evolved over time in these countries, but to also illustrate why

different decentralization approaches can result in dramatically different quality outcomes.

Table of Contents



1. Introduction

Decentralization is probably the single most advocated reform for improving the provision of basic

services such as education in developing countries. Proponents argue that by taking decision-making

“closer to the people”, decentralization in service delivery can increase relevance in decision-

making and enhance accountability. Both of these, the advocates posit, can in turn translate into

tangible improvements in the quality of education.

The aims of this paper are twofold: (1) to investigate key trends in the evolution of educationdecentralization policies since 2000 and (2), to examine the empirical relationship between

decentralization and educational quality. The paper addresses these aims by first reviewing the

decentralization experiences of several countries more generally, and then by undertaking detailed

case studies of Mexico, Indonesia and Kenya to illustrate how different approaches towards

education decentralization can result in differing quality outcomes. Over the past two decades,

developing nations have made rapid progress in increasing participation in schooling. Less progress,

however, has been made in ensuring that the education dispensed is of adequate quality. Enhancingour understanding of decentralization’s potential in this arena can thus have broader policy

implications for how nations address the endemic low quality challenge in the future.

At the onset, it is important to establish that although education decentralization initiatives are now

ubiquitous, they are not uniform in content. Rather, there are countless configurations of

decentralization schemes across the globe, as reforms differ substantially based on what education

decision making responsibility has been devolved and what level it has been devolved to For the



2. Decentralization and quality of education

The production of education is a complex process. Besides inputs such as desks, textbooks and

teachers, the quality of delivery often also depends on understanding what local learning challenges

exist and on providing the right incentives to address these challenges.

By borrowing arguments from the first generation literature on decentralization (see Tiebout 1956;

Oates 1972), proponents posit that decentralization of education has the ability to improve the

quality of education. This claim is usually based on two arguments:

1.

First, advocates contend that locating decisions regarding education closer to those

responsible for delivering it can enhance the relevance of decision making through greater

knowledge of local needs and preferences. The standardized delivery by central

governments, on the other hand, is assumed to be unable to address these heterogeneous

demands. In practice, through this route, local governments or schools could for instance

improve learning by directing greater resources to customized areas of need, or by tailoringclass plans to focus on topics that local students appear to be struggling with the most.

2. Second, supporters assert that decentralization can increase accountability in the education

system by locating decision-makers closer to parents and the community. These

stakeholders can then voice their concerns, as well as monitor education delivery more

directly. This argument is more commonly expounded using a framework from the 2004

World Bank Development Report Making Services Work for Poor People hi h i di t



3. Evolution in education decentralization policies: impetus and popularity

Decentralization has proven to be a popular reform in the developing world. According to World

Bank (2008), most client countries have decentralized responsibilities to at least one level of lower

government. Just as widespread has been the adoption of school-based management practices –

countries as diverse as Argentina, Thailand, Israel and Senegal have all experimented with the

initiative in one form or another (Barrera-Osorio et al. 2009). Table 1 highlights reforms for a sample

of selected countries to illustrate decentralization’s prevalence, both before and after the year 2000.

3.1. Efforts in the 1980s and 1990s

Amongst the earliest decentralizing nations, the

impetus for transferring decision-making authority

to local governments was usually a broader political

or economic reform. In much of Latin America, for

instance, decentralization formed an integral part of

wider political democratization movements (Litvacket al. 1998). In the former Soviet Union and Eastern

Europe, decentralization of education authority

accompanied the important shift from a command

to a market economy (De Grauwe 2005). In other

countries such as South Africa and Sri Lanka,

decentralization emerged as a tool for addressing

th i di it d fli t (W ld B k 2008)

Table 1: Key Decentralization Reforms in

Selected Developing Countries

Decentralization to local

governments

Decentralization to

schools

Pre 2000

Argentina

Bangladesh

Bolivia

BrazilBurkina Faso

Chile

China

Colombia

Ethiopia

India

Russia

South Africa

Sri Lanka

Tanzania

Argentina

Brazil

El Salvador

GuatemalaHonduras

Hong Kong

Israel

Mexico (AGE)

Nicaragua

Thailand



between 1990 and 2006, the Bank’s commitment on projects with a decentralization component

stood at approximately USD 32 billion, spread over almost 90 countries (World Bank 2008).

Other scholars note that the earliest decentralizing nations were probably more concerned with

dismantling large, costly bureaucracies than in specifically improving learning outcomes (Caldwell

2005). Consistent with this proposition is the fact that evidence on the efficacy of education

decentralization at that point in time was still overwhelmingly pessimistic. In a review of 56 studies

published from the 1990s, for example, Shah et al. (2004) noted that decentralization to lower levels

of governments in some cases improved and in many others worsened service delivery. Similarly, in

a comprehensive survey of 83 empirical studies on SBM, Leithwood and Menzies (1998) argued that

there was no evidence of any effect of the reform on student outcomes at all.

3.2. Education decentralization in the 2000s

Since the mid-1990s, there has been significant progress in the literature on education and

decentralization. The most crucial development perhaps has been the growing consensus that inputs

such as desks, textbooks and blackboards are not enough to enhance learning (see Hanushek 1995;Glewwe and Kremer 2005). This consensus has understandably resulted in an enhanced focus by

governments and donors alike on governance reforms such as decentralization instead. A

concomitant development has been the increased availability of data on student attainment, which

has permitted more rigorous evaluations of the effect of decentralization on quality. A handful of

studies now suggest that the scheme can be beneficial to educational quality after all ( see next

section). This has further invigorated enthusiasm for the reform amongst the stakeholders involved.



One reason for the prevalence of this particular trend was the fact that most countries had already

decentralized in some form or other by the late 1990s – for these countries, deepening was simply a

form of organic growth in public sector reform. The much more common reason, however, was the

multiple challenges most countries faced in their early experiments with the scheme. A whole strand

of literature in fact became dedicated to exploring these early instances of decentralization “gone

wrong” (see Prud’homme 1995; Tanzi 1995). Scholars in this vein highlighted, among other

challenges, misaligned incentives, weak or stalled implementation, unfunded mandates and serious

issues in capacity and training. Unsurprisingly, throughout the 2000s, countries suffering from such

challenges turned to the multilateral agencies that had advocated decentralization in the first place

for both technical advice and funding support on how to strengthen their reforms.

Stimulated by these challenges, as well as the second generation literature on decentralization that

had by this time shifted from a normative stance to a more political economy approach, donors

altered their approach towards reform adoption - particularly so in the late 2000s. Increasingly, the

World Bank, for instance, advocated undertaking a political economy analysis in order to understand

whether decentralization’s benefits could be realized in a particular context (for e.g. see Eaton et al.2010). The politics of the reform gained centrality in this new approach, and policymakers not only

became more conscious of the incentives of different actors in the decentralization process, but also

began to acknowledge their own role as political actors in the implementation of these schemes.

Examples of projects funded by the World Bank in this post 2000 era for strengthening previous

education decentralization reforms, to name a few, included: capacity building initiatives in Bolivia

d Ethi i l t d t li ti t ff t i El S l d d i t ti t ti



that many of the evaluations of the intervention were sponsored by the Bank itself, who by this time

had become a key supporter of SBM. Trends in the Bank’s education project funding are telling of

this support. Between 2000 and 2006, to illustrate, 10% of the World Bank’s education portfolio

supported SBM initiatives (Barrera-Osorio et al. 2009). In the fiscal year 2012, on the other hand,

almost 50% of the 17 operations approved by the World Bank’s Education Sector Board contained

school decentralization elements.

3.2.3. Increased decentralization activity in Africa

Finally, recent years have also seen African countries as diverse as Kenya, Morocco, Chad and Benin

all decentralizing elements of their education systems.

Political reforms and increased stability in the region contributed significantly to these increased

decentralization efforts. In Congo and Sierra Leone, for instance, the end of civil wars in the early

2000s prompted renewed interests in decentralization to local bodies. In Rwanda, stability after the

end of genocide in the 1990s allowed the country to also embark on decentralization to lower tiers

of government in the 2000s. By this time, many nations in the region had embraced democracy andmulti-party political systems, both of which resulted in significant shifts in political power in

individual nations. In 2000, for example, the opposition party in Senegal won elections after 19 years

of rule by the same party. Similarly, in Guinea, the first civilian election since independence was held

in 2010. This general trend of political reform was more often than not accompanied by public sector

reform in general, and decentralization programmes in particular.

B id liti l f i ifi t i i f di f i l t i t l



4. Evidence on decentralization and the quality of schooling

The previous section highlighted just how widespread decentralization is today. In spite of this, the

empirical evidence linking decentralization and quality of schooling is as yet limited in size and

quality. Varying reform content, limited data availability, and the difficulty of disentangling

decentralization’s effects from those of other reforms that tend to accompany it have severely

restricted our ability to draw conclusions on what decentralization can and cannot do.

That said, the evidence base in this arena is fortunately not only growing, but is also increasingly

employing more sophisticated methods to isolate the causal effects of education decentralization.

Establishing causality is the hallmark of good impact evaluation. And in the field of economics,

ascertaining whether relationships can be considered causal generally relies on employing what is

referred to as a credible identification strategy – an empirical strategy that allows for the

measurement of a counterfactual; or in a layperson’s terms, a strategy that permits the

measurement of what would have happened had the participants not received the decentralization

intervention (see Gertler et al. 2007 for a more detailed discussion on establishing causality in schooldecentralization interventions).

This section summarizes key studies that

attempt to quantitatively establish a causal link

between education decentralization and the

quality of schooling, as measured by

hi t f il titi d

Table 2: A Basic Introduction to Selected

Identification Strategies

An identification strategy can be defined as the “manner in

which a researcher uses observational data to approximate a real

experiment” (Angrist and Pischke 2009: pp. 7).

Randomized

controlled trial

or experiment

Considered the gold standard for establishing

causality in econometrics, this method

randoml assigns participants into treatment



4.1. Studies using randomized controlled trials

Understandably, there is no experimental evidence on education decentralization to lower levels of

government. There are, nevertheless, four contributions that use randomized trials to investigate

SBM’s potential in enhancing attainment. These four papers yield somewhat positive findings.

The most optimistic evidence is due to Duflo et al. (2007), who examine a randomized controlled

trial from Kenya. The trial tested a number of interventions on 210 primary schools, one of which

involved an SBM component that empowered school councils to hire and monitor contract teachers.

Duflo et al. compare the SBM groups to their counterparts in the control group to show that

students in the treatment cell scored 0.18 and 0.24 standard deviations higher in Mathematics and

Language than their non-treated counterparts (see also Kenya case study ).

Just as positive is a trial from Indonesia, which was implemented in approximately 500 public

schools (Pradhan et al. 2011). In particular, the RCT tested the impact of providing a block grant of

approximately USD 800 to treated schools, in addition to a combination of three initiatives including

training, election of SC members, and collaboration with the village council. Pradhan et al. (2011)find that the training intervention had no effect on learning, but that both the election and linkage

interventions were successful. Student test scores increased by 0.17 standard deviations for linkage,

and 0.22 standard deviations for linkage and elections (see also Indonesia case study ).

Blimpo and Evans’ (2011) study of an experimental trial in The Gambia is marginally less optimistic,

yet suggests that SBM can have positive effects on absenteeism. The Gambia experiment comprised

f t d h l t i i i 273 i h l Th th fi d th t f



4.3. Studies using cross-sectional data analysis

The studies employing primarily cross-sectional data analysis are not unanimous where the benefits

of decentralization to lower levels of government are concerned. Freinkman and Plenakanov (2009),

for instance, find that the statistical relationship between test scores of students from Russia and

regional fiscal decentralization is consistently positive. Treisman (2002), on the other hand, finds

that the presence of constitutional autonomy and electoral accountability at the local level are both

associated with a higher level of youth illiteracy in data from up to 166 nations. Meanwhile, Di

Gropello (2002) shows conflicting results on the impact of municipality level devolution on quality in

Chile. She finds that both devolved wage incentives and training expenditure at the municipal level

are associated with higher scores, while greater financial autonomy is not.

Numerous country-level contributions from the Latin American region also report contradictory

findings on the impact of school decentralization on quality. Jimenez and Sawada (1999) examine

EDUCO from El Salvador, perhaps the most celebrated case of SBM, in which community schools

were established to enhance access in rural areas. They find no significant difference in test scores,

although do observe that student absenteeism is lower in EDUCO schools. In a follow-study, theycontend that EDUCO students also have higher continuation rates. Sawada and Ragatz (2005) use a

different econometric technique on the same dataset, still finding no impact on student

achievement but noting significantly lower teacher absenteeism.

In an examination of SBM in Nicaragua, King and Ozler (2000) argue that it is not school autonomy

on paper (de jure), but rather autonomy in practice (de facto) that that improves student

f P k (2005) id i d t f th f U i ti ll



That said, mixed findings from cross-country analyses of the Latin American region and of 42

countries participating in PISA suggest that the effect of SBM may be heterogeneous across

countries. Thus, the detailed case studies that follow in the next section consider why this might be

the case. They do so by exploring the different contexts of, motives for, and nature of

decentralization reforms in Mexico, Indonesia and Kenya.

In addition, randomized trials from Madagascar and The Gambia respectively demonstrate that

interventions may take time to be beneficial or may be predicated on prerequisites such as

community literacy. These prerequisites to realizing the benefits of decentralization, as well as

others suggested in the literature, are briefly discussed in the final section of this paper.



5. Education decentralization case studies

The three case studies in this section describe the distinct approaches to education decentralization

adopted by Mexico, Indonesia and Kenya. The three countries are similar in that each one of them

has achieved a satisfactory level of primary enrolment, yet has continued to struggle with poor levels

of educational quality. They are dissimilar in almost all other respects - they represent different

geographies, differing levels of income, and varying models of education decentralization.

The Mexico study describes the case of a middle income country whose decentralization trajectory

has been significantly influenced by prevailing economic conditions, the vested interests of a

powerful teachers’ union as well as a change in political leadership in the 2000s. Since the 1980s the

government has been gradually decentralizing more authority to local governments, although

Mexico’s education system continues to be criticized for being too centralized. Evidence on the

nation’s school decentralization initiatives, however, is optimistic – multiple studies indicate that

SBM interventions have been successful in improving both quality and crucially, equity in education.

In sharp contrast to this, evidence on the efficacy of the Indonesian reform is both thin and

contradictory. Indonesia, a lower middle income country, implemented a “Big Bang”

decentralization scheme in 2000 with the assistance of the World Bank. However, design and

implementation issues are commonly acknowledged to not only have limited decentralization’s

potential in enhancing learning, but to also have contributed to increasing inequity. The Indonesia

case study thus illustrates the importance of both these elements in the success of decentralization

h hil l h i i i d d f h f i



5.1. Mexico

At the primary level, net enrolment in Mexico had reached close to universal as early as the mid-

1980s. However, compared to other OECD countries, quality in the education system remained poor

even after taking the country’s lower level of development into account (Hagerstrom 2006).

Poor quality in fact plagued the education systems of most Latin American nations at the time. The

region had one of the highest repetition rates in the world, and tests showed that students learned

less than in other regions (Murillo 1999). The first PISA test in 2000 confirmed this lack of learning -

almost all Latin American nations underperformed on the assessment. Out of the 32 countries that

participated, Mexico’s 15 year olds statistically outperformed their counterparts in mathematics in

just three other countries (PISA website).

5.1.1. Early decentralization efforts

The debt crisis of 1982 and the economic crisis of 1994 both affected Mexico acutely. Mexico thus

embarked on a series of adjustment programmes to reduce government expenditures and raise

revenues throughout the 1980s and 1990s (Murillo 1999).

As part of these adjustment programmes, as well as a broader shift towards a more open economy,

Mexico began to pass autonomy to states in the early 1980s (Ornelas 2000). Educational institutions

at this time were notorious for their rigidity, inefficiency and unresponsiveness (Murnane et al.

2006). Thus, in his inaugural speech in 1982, President De la Madrid, announced the transfer of basic

education to the states, citing the goals of improving quality and equity. Although there appeared to

b f h f h i d l i h h IADB d



Sceptics criticized the decentralization scheme, arguing that decision-making in fact became even

more centralized as a result (Gerschberg 1999). Besides authority over personnel, the Centre

continued to maintain control over the curriculum, testing, and budgeting. The lack of meaningful

devolution was evident in the financial arena as well. Financing remained predominantly federal at

over 80% well after the reform’s implementation (ibid.). Moreover, financial transfers to states were

determined by annual negotiations rather than transparent criteria-based formulae. On the

expenditure side, devolution was likewise limited - states effectively gained control of only 10% of

expenses as the other 90% comprised of teachers’ salaries, which were determined centrally.

The 1992 reform also called for the establishment of councils of social participation of education,

comprising of teachers, parents and community members (Ornelas 2000). These councils, however,

remained dysfunctional for a long time. To mobilize them and also as part of a broader equalization

programme for schools, in 1996 Mexico launched the Apoyo a la Gestion Escolar (Support to School

Management) or AGE initiative. AGE gave cash grants of USD 500 to USD 700 to school councils in

highly disadvantaged communities to spend on avenues they considered appropriate (Barrera-

Osorio et al. 2009). Grants were generally meant to be used on infrastructure projects and parentshad to commit to greater involvement in schools. Although the authority given to parents and

schools was limited, AGE did represent the first time such authority was devolved .

Over the next decade, some states made efforts to further decentralize to the municipal level, while

the Centre itself also bundled modest increases in state autonomy into other education reforms. In

spite of this, the country’s political system remained one of the most centralized in the world

(G i dl 2007)



5.1.3. Effects on quality of schooling

The literature examining the effect of decentralization to local governments on the quality of

education is limited, most likely due to the restricted content of the reform implemented. On the

other hand, as the largest SBM reform in Mexican schools, the PEC intervention has been widely

evaluated. Authors not only conclude that it limited corrupt practices and improved school

infrastructure and security (Skoufias and Shapiro 2006; Bruns et al. 2011), but three papers also use

quantitative analysis to argue for a causal relationship between participation in the PEC programme

and improved educational quality indicators.

In the first, Skoufias and Shapiro (2006) use panel data from 2000 to 2003 to examine the

relationship between participation in PEC and educational quality. They adopt an econometric

technique known as difference-in-differences with matching to find statistically significant decreases

in dropout rates of 0.24 points, failure rates of 0.24 points and repetition rates of 0.31 points. In the

second evaluation, Murnane et al. (2006) use a similar econometric methodology but add data for

an additional year of PEC participation to corroborate the previous study’s positive findings. They

report that each year of participation in the PEC programme resulted in a decline in the dropout rateof 0.11 percentage points. Moreover, they also demonstrate that PEC participation facilitated the

largest reduction in dropout rates in states with middle values on the human development index.

Three years of participation reduced dropout rates in these schools by an average of 0.33

percentage points. On the other hand, states with low values on the human development index had

negative values in the initial years that became positive in the later years but was never statistically

significant. The authors posit that this difference may be due to the varying levels of capacity in

d i d f diff I i l l fi d i ifi



5.1.4. Concluding Remarks

The 2012 PISA results for Mexico are encouraging. Both performance in mathematics and equity in

educational opportunities improved dramatically compared to previous years (PISA website).

Decentralization has undoubtedly contributed to this progress, together with other education

initiatives on nationalized testing, teacher training and accreditation, and early education. That said,

55% of students still do not meet the benchmark for mathematics, indicating that there is room for

quality improvement in the education system yet. Much of the literature on the decentralization

scheme from the country indicates that greater autonomy devolution to states and schools over

financing and human resource management may have to ability to yield additional benefits. On the

equity front, targeted SBM programmes for disadvantaged schools have contributed to improving

opportunities for students with a low socioeconomic status. The main challenge in the future will be

to improve overall educational quality without negatively affecting this above average equity.

5.2. Indonesia

By the middle of the 1980s Indonesia had achieved universal primary enrolment, leading many to

proclaim it as a model of excellence for the rest of Asia. Quality of schooling in the country, however,remained poor with most students leaving the education system without the necessary literacy and

numeracy skills (Behrman et al. 2002). According to the 1999 TIMSS study, the performance of

Indonesia’s eighth grade students stood below international standards, with an average score in

mathematics of 403 against the benchmark of 500 (TIMSS website).

Besides quality, equity was also a subject of great concern in the pre-decentralization era – remote

f h l i l d i ff d f l k f h d k d b k



Not only was education decentralization on the list of recommendations made by the World Bank to

deal with the issues of low quality and increasing financial pressure of schooling (Behrman et al.

2002), but the broader reform also served as a key condition in the post-crisis IMF rescue package

offered to Indonesia (Kristiansen and Pratiko 2006).

5.2.2. Education decentralization reforms

Although the Indonesian government had already demonstrated its commitment to education by

making nine years of schooling compulsory in the 1990s, the education system had remained

extremely centralized. This of course changed dramatically with the implementation of the

decentralization scheme in 2001 when districts became responsible for establishing new schools and

for setting local education policies (World Bank 2012). As is common in most decentralization

programmes, the Centre continued to maintain control over setting and maintaining national

competency standards, curriculums and education calendars, as well as over implementing

evaluations (King and Guerra 2005).

Unlike the previous case study of Mexico in which the central government did not devolve anystaffing decisions to lower levels of governments, Indonesia’s reform also made provisions for

sharing the human resource management responsibilities for teachers. District governments were

given the responsibility of employing all teachers in the public schooling sector (with the exception

of those for madrasah schools), as well as the authority to hire and dismiss contract teachers.

Because teachers were civil servants, salary levels and ranks continued to be set centrally.

Nonetheless, district governments could transfer teachers, recommend promotions and provide

l b f d ( )



important exception. Using data from 1994 to 2006, Simatupang reports that more than half of

Indonesia’s municipalities experienced changes in education outcomes in the post reform period.

She uses a quasi-experimental methodology to find an overall statistically significant reduction in

drop-out rates at the primary and high school post decentralization.

Along a different vein, Kristiansen and Pratikno (2006) study four districts to provide moderate

support for the intervention’s perceived impact on quality of education. Based on the results of over

500 household surveys, they report that 81% of parents believed the quality of their children’s

schooling had improved after the reform. SC members, school management and district officials

interviewed for a comprehensive World Bank study in 2012 concurred – they noted that block grants

had had a positive effect on transition rates to junior high schools, enrolment rates of poor students

and had overall also improved student academic performance.

On the other hand, there are those who show that the impact of decentralization reforms has been

limited to date. Skoufias et al. (2011) for instance find that although electoral reforms have resulted

in higher revenue generation from own sources, more district-level budget surpluses and greater

expenditure on education, there was no significant impact on service delivery outcomes in the two

years following implementation. Where SBM is concerned, the World Bank study mentioned above

yields similarly pessimistic findings. It concludes that the status of SBM implementation in schools

was not statistically correlated with student test scores. Both investigations suggest that a short time

since implementation may be the key reason why benefits of decentralization are not discernible.

li i h ll



result of decentralization, thus increasing inequity in education. Although transfers to local

governments are now formula-based, imperfections in the formula imply that the equalizing

property of these grants is weak (Hofman and Guerra 2005). A lack of self-sufficiency in revenues

and the inadequacy of the transfer grant from the Centre have further resulted in a notable neglect

of development expenditures at the local level (Brodjonegora 2004). Moreover, according to

Kristiansen and Pratikno (2006), even five years after decentralization no expenditure data had been

made available to local oversight bodies or the civil society, thus resulting in a total lack of

accountability on this front. Due to the lack of transparency, local government officials often also

remained unclear about what level of funding was available to them (King and Guerra 2005).

5.2.5. Concluding Remarks

Despite its promises, decentralization has not been a panacea for Indonesia’s quality challenges.

Quality of education remains low - the country ranked second last on the PISA 2012 mathematics

achievement test (PISA website). Besides inadequate facilities, scholars highlight that there are

serious issues related to poor teacher attendance and corruption in the bureaucracy (UNESCO 2006;

Kristiansen and Pratikno 2006). More capacity building and training, as well as enhanced

transparency and horizontal accountability may thus be useful in improving decentralization’s ability

to address these concerns. On the equity front, even after decentralization inequalities based on

socioeconomic status and geography have persisted (Kristiansen and Pratikno 2006). Although the

Centre has supported the Periphery through special funds allocated to national programmes on

education, they have not been sufficient in addressing the equity challenge. The above suggests that

a lot more remains to be done if Indonesia wants to enhance student learning.



(Kremer et al. 2003). Ostensibly though, the government argued that centralization in service

delivery was necessary to not only promote tribal unity in an ethnically fractionalized nation, but

also to address increasing financial pressures and poor service delivery performance (ibid.).

Over time, in spite of both local and international pressure to strengthen them, the local

governments became more and more marginalized (Menon et al. 2008). In 1966, for example, a

commission charged by the President recommended ambitious reforms to empower local

governments. But rather than implementing these reforms, in 1969 the parliament implemented the

Transfer of Functions Act, which abolished most of the financing provided to the Periphery, and took

away their control over primary education (Smoke 1993).

Recommendations made by the IMF to stop the weakening of local governments in the 70s and 80s

continued to be largely ignored by the ruling regimes, and government responsibilities were

increasingly recentralized. The share of spending by local governments to GDP thus fell from 3.26

percent in 1970 to a mere 1.22 in 2000 (Rocaboy et al. 2013). The local governments with their

limited decision-making authority nonetheless continued to exist side by side a deconcentrated

central government system that had been responsible for implementing directives made by the

Centre since independence (Menon et al. 2008).

The centralization of the broader system notwithstanding, education in Kenya had always

incorporated at least some decentralized community control of schools through the institution of

Harambee. Harambee literally translates to “Let’s pull together” and is a movement with precolonial



was successful in giving at least some financial independence back to local bodies (Rocaboy et al.

2013). However, there remained restrictions about how local governments could dispose of these

increased funds. A concomitant directive also delegated authority to electoral districts or

constituencies to develop local projects for service delivery under an elected member of parliament.

The move added yet another alternative type of local bureaucracy to compete with local

governments and the deconcentrated administrative system (ibid.).

In 2003, a new government promised a renewed commitment towards devolution. Because the legal

basis for local governments was still grounded in the original 1963 Local Government Act, an

attempt was made by the government to establish a new decentralization framework into the

Constitution in 2005 (Menon et al. 2008). The provision failed to win a popular vote referendum. In

August 2010, yet another Constitution was proposed and approved through a referendum for

gradual implementation – this Constitution restores decision-making autonomy to local bodies. A

new local government law was also drafted to clarify the role of local bodies (Rocaboy et al. 2013).

Given these recent changes, the fate of decentralization in the country still remains in flux.

5.3.3. Effects on quality of schooling

Given the status of decentralization in Kenya, very little can be said about the relationship between

the intervention and the quality of education. Understandably, much of the literature on the topic

from the country focuses on design issues and challenges, not on service delivery outcomes.

The one exception is due to Duflo et al. (2007). The authors evaluate a randomized controlled trial of



23 of 34

Table 3: Case Studies Factsheet

Mexico Indonesia Kenya

Basic Information

Population 116 million (2013 estimate) 254 million (2014 estimate) 45 million (2014 estimate)

GDP per capita (PPP) USD 15,600 (2012 estimate) USD 5,200 (2013 estimate) USD 1,800 (2013 estimate)

World Bank classification Middle income Lower middle income Low income

Key Education Statistics (year recorded in brackets)

Primary GER 104 (2011) 109 (2011) 112 (2009)

Secondary GER 84 (2011) 81 (2011) 60 (2009)

Primary NER 96 (2011) 94 (2011) 82 (2009)

Secondary GER 67 (2011) 75 (2011) 50 (2009)

Survival to end of primary 95 (2010) 88 (2010) 78 (2004)

Achievement statistics PISA 2012 mathematics – ranked 53 out of

64 nations tested

PISA 2012 mathematics – ranked 63 out of 64

nations tested

No international comparisons available

Governance and Decentralization

Independence date 1821 from Spanish rule 1945 from Dutch rule 1963 from British rule

Government structure Federal republic Federal in first few years after independence.

Then unitary republic

Federal in first year after independence.

Then unitary republic

Decentralization reform date 1992, with additions through next two

decades

Big bang in 2000, with additions through 2000s Original local government act in 1963.

Reforms in flux since then

Education decentralization content Weak to Moderate

Local governments responsible for education

delivery but fiscal and human resource

devolution limited

Moderate

Local governments responsible for education

delivery but fiscal devolution limited

Weak

Local governments have in the past few

decades had little authority over education

delivery. System highly centralized

SBM content Moderate

AGE and PEC interventions both give grants

as well as some authority over how to use

funds

Moderate

Local councils receive BOS funds and are

allowed to use based on school priorities

Moderate in specific aspects

Harambee system gave communities control

over establishing schools. RCT tested a

stronger form of SBM

Impact on quality Evidence base on SBM strong. Indicates that

both AGE and PEC participation enhances

schooling quality.

Evidence base thin and contradictory. Evidence base thin overall.

RCT on SBM type intervention of monitoring

contract teachers suggests improvements in

quality .

Source: Author’s own compilation. Statistics are from CIA Factbook, UNESCO Institute of Statistics and PISA websites



6. Prerequisites for success

A large policy literature suggests that decentralization reforms that are incomplete, badly designed,

poorly implemented or lacking in strong political sponsorship are seldom successful (see Litvack and

Seddon 1999; WDR 2004; Caldwell 2005). Conversely, schemes that encourage accountability, are

designed with the local context in mind, build capacity as well as foster key stakeholder buy-in are

the ones that are able to actually enhance service delivery. Empirically, the importance of some of

these design and implementation elements was highlighted in the case studies presented earlier.

In recent years, the empirical evidence has provided support for many of the other prerequisites

suggested in the policy literature. Studies on school decentralization from El Salvador (Jimenez and

Sawada 1999) and Honduras (Di Gropello and Marshall 2005), for example, suggest that community

participation in schools can indeed increase accountability. Research from Bolivia (Faguet 2004)

indicates that community oversight is particularly important for decentralization schemes to be

effective. Yet in many countries such as Pakistan (Cheema 2007) and Indonesia (Pradhan et al. 2011),

many participatory mechanisms remained inactive several years after implementation. Moreover, incontexts where there is widespread social inequality, chances of elite capture usually increase, thus

limiting reform success (see Prud’homme 1994). Further, inherent characteristics of populations

shall as ethnic diversity have been shown to restrict the efficacy of community participation in

countries like Kenya (Miguel and Gugerty 2005) and Ghana (Akramov and Asante 2009). In order to

ensure that community participation and oversight do in fact translate into greater accountability, it

may be important to take steps to prevent projects from falling into these common pitfalls.



Of course, even if the above prerequisites are present, the benefits of decentralization may still

require a certain amount of time and experience before they become evident. Putnam (1993)

argues that decentralization should be evaluated not over years, but over decades. In the years

following decentralization, governments learn by doing, and in this period adjustments in design,

receptivity and participation are common.

Borman et al. (2003) offer evidence in this regard specifically for school decentralization schemes.

They examine over 800 SBM designs in the US to posit that it takes 5 years for changes of the reform

to be institutionalized, and 8 years for SBM to actually affect student learning or outcomes. In a

study of the Chicago SBM reform, Hess (1999) illustrates this very argument, showing that after an

initial fall in scores, student attainment recovered by the fifth year. Evidence from Mexico (Bando

2010) lends further support to this prerequisite, demonstrating that more experience with certain

reforms may improve the ability of participates to benefit from them.



7. Concluding remarks

As this paper has shown, decentralization in the education arena is a popular reform – by now

almost all developing nations have experimented with the reform in one form or another. Yet the

size and quality of the evidence linking decentralization to improvements in learning is limited. A

handful of more rigorous evaluations - such as those from Argentina, Brazil, Mexico, Indonesia, and

the Philippines – do nonetheless demonstrate that decentralization has the potential to address

quality concerns in developing countries.

Certainly, a lot more empirical research and particularly research with a stronger empirical design is

required before firmer conclusions than the above can be drawn on the relationship between the

two. As the size of these rigorous evaluations grows, research needs to focus on two areas in

particular: first, what specific forms of decentralization work well, and which work less well and

second, what prerequisites allow decentralization to achieve its potential in enhancing learning.

Where the former is concerned, the review indicated that effects may be heterogeneous across

countries. The case studies in turn illustrated how at least some of this heterogeneity may be theresult of reform design and implementation. As of now, however, the scholarship is too small to

draw firm conclusions on specific elements of these two factors. In the latter area of prerequisites,

the empirical evidence is fortunately larger. Thus far it has shown support for community

participation, capacity building and training, a continued role for the Centre, and time and

experience. There are, however, instances when even the presence of these conditions has not

resulted in better quality – this suggests that there may be additional factors that are relevant.



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9. Appendix

Table 4: Summary of Selected Evidence on Decentralization and Quality

Country Authors Date Type Programme Method of Analysis Sample Results

3.1. Studies using Randomized Controlled Trials

Kenya Duflo et al.(2007)

2005 SBM Randomized trial which gaveschool councils money,

autonomy and training to hire

extra teachers and monitor their

performance

Comparison of treatmentand control groups.

21k students from 210schools

SBM associated with▪ Increase in Mathematics scores of

0.24 standard deviations

▪ Increase in Language scores of 0.18

standard deviations

Indonesia Pradhan et

al. (2011)

2007 SBM Randomized trial which gave

school councils a grant, in

combination with training, help

with school council elections

and/or linkages to village council.

Comparison of treatment

and control groups.

520 schools ▪ No impact of training alone

▪ Village linkage associated with

increase in test scores of 0.17 standard

deviations

▪ Village linkage and elections

associated with increase in test scores

of 0.22 standard deviations

The Gambia Blimpo and

Evans (2011)

SBM Randomized trial which gave

school councils a grant in

combination with training


and control groups.

237 primary schools ▪ No significant association with test

scores

▪ 20% reduction in student

absenteeism

▪ 23% reduction in teacher

absenteeism

Madagascar Glewwe and

Maiga (2011)

2005 SBM Randomized trial in which

materials, training and greater

accountability is given to three

levels of districts, sub-districts

and schools


and control groups.

20k students from 30

districts over period

2006 to 2007

▪ No significant association with test

scores

3.2. Studies using Quasi-experimental Techniques or Panel Estimations

Argentina Galiani et al.

(2008)

1991 LG Decentralized financing, staff

management and budgeting to

LG

Difference in differences Almost all secondary

schools over period

1994 to 1999

▪ D associated with higher Math and

Spanish scores

▪ Increase of 4.9% and 6.9% in scores,

respectively



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Mexico Gertler et al.

(2011)

1996 SBM Small grants to parent councils

and parental training targeted at

disadvantaged areas – AGE

Difference in differences 30,000 students from

6,000 schools over

1997 - 2001

SBM associated with

▪ Reduction in failure rates by 5.4%

▪ Reduction in repetition rates by 4%

▪ No impact on drop-out rates

Mexico Skoufias and

Shapiro

(2006)

2001 SBM Annual grants of up to USD 15k

given to schools/SMCs to

improve education quality - PEC

Difference-in-differences

with matching

75000 schools over

period 2001 – 2003

SBM associated with

▪ 0.24 lower dropout rates

▪ 0.24 lower failure rates

▪ 0.31 lower repetition rates

Mexico Murnane et

al. (2006)



improve education quality – PEC

Difference in differences Data from 2001 - 2004 ▪ Each year of participation resulted in

decline in dropout rate of 0.11

percentage points

▪ No impact on failure rates

Mexico Bando

(2010)



improve education quality – PEC

Fixed effects on panel

data

Data from 2001 to

2006

▪ Five years of participation is

associated with increases in Math

scores of 0.09 standard deviations

▪ Five years of participation is

associated with increases in Spanishscores of 0.07 standard deviations

Brazil Paes de

Barros and

Mendonca

(1998)

1982 SBM SBM with three key innovations:

▪ Financial autonomy of schools

▪ Ability to elect principals

▪ Presence of school councils

Difference in differences -

state-level

18 states over period

1981 - 1993

▪ Lower repetition rates associated

with financial autonomy

▪ Lower mean grade level lag

associated with financial autonomy

and school councils

▪ Lower proportion of students with lag

associated with school council

presence.

Philippines Khattri et al.

(2010)

2003 SBM Training and direct funding for

school improvement

Difference in differences

with matching

5k schools from 23

districts over 2003 to

2005

SBM associated with

▪ 1.45 percentage points overall

improvement▪ 1.82 percentage points improvement

in Science

▪ 1.32 percentage points improvement

in English

▪ 1.88 percentage points improvement

in Mathematics



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Cross-

country

Gunnarsson

et al. (2009)

Various SBM Various Instrumental variable 17k students from 10

Latam countries - 1997

survey data

▪ Autonomy associated with lower test

scores

▪ Participation associated with higher

test scores

Cross-

country

Hanushek et

al. (2011)

Various SBM Various Regression with country

fixed effects

1mn students from 42

countries - 4 waves of

PISA from 2000 to

2009

▪ Overall negative association between

autonomy and scores

3.3. Studies using Cross-sectional Data Regression Analysis

Russia Freinkman

and

Plekhanov

(2009)

Phased

beginning

in 1994

LG Increased fiscal powers with rule-

based transfers, responsibility for

public services

Regression analysis using a

between effects model

Secondary school

results from 73 out of

83 regions, tested in

2004 and 2005

▪ D associated with higher test scores

Cross-country

Treisman(2002)

Various LG Various Regression analysis Up to 166 countrieswith cross-sectional

data collected from

mid-90s

▪ D associated with higher youthilliteracy

Chile Di Gropello

(2002)

Early

1980s

LG Some increase in devolved funds

to LG, greater responsibility for

public services. In 1990s, greater

pedagogical devolution to schools

Regression analysis 50 municipalities (out

of 355) - Student tests

conducted in 1996

▪ Municipal financial autonomy not

significant

▪ Municipal training spend and wage

incentives positively associated with

test scores

▪ School involvement in financial

decision-making positively associated

with test scores

▪ School pedagogical and curricular

autonomy positively associated with

test scores

El Salvador Jimenez and

Sawada

(1999)

1991 SBM Community schools where SMCs

can hire/ fire teachers, manage

school funds and maintain

infrastructure

Regression analysis with

Heckman correction

model

605 3rd grade students

from 162

municipalities - data

from 1996

▪ No association with Math or English

test scores

▪ Students in EDUCO schools have

lower absenteeism



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El Salvador Sawada and

Ragatz

(2005)


can hire/ fire teachers, manage

school funds and maintain

infrastructure

Matching 605 3rd grade students

from 162

municipalities - data

from 1996

▪ No association with scores

▪ Lower teacher absenteeism in EDUCO

schools

Nicaragua King and

Ozler (2000)

1991 SBM Autonomous schools with SMCs

that can hire/ fire teachers,

manage school funds and

maintain infrastructure

Matching 3000 students from

primary and secondary

schools over period

1995 – 1997

▪ No impact of de jure Autonomy

▪ Positive association of de facto

Autonomy with Math and Spanish, no

association with Language

Nicaragua Parker

(2005)

1991 SBM Autonomous schools with SMCs

that can hire/ fire teachers,

manage school funds and

maintain infrastructure

Matching 1000 3rd and 6th grade

students - tested in

2002

SBM associated with

▪ Higher third grade Math scores

▪ Lower sixth grade Math scores

▪ No association with Spanish scores

Honduras Di Gropello

and Marshall(2005)


can hire/ fire teachers, manageschool funds and maintain

infrastructure

Regression analysis with

Heckman correctionmodel

200 rural schools

tested in 2002 and2003

SBM associated with

▪ Higher science scores but with nochange in Math or Language test

scores

▪ Marginally lower dropout rates

Argentina Eskeland and

Filmer

(2007)

1978 SBM Schools choose textbooks and

teaching methods.

Regression analysis 24000 6th and 7th

grade students from

urban schools

SBM associated with

▪ Higher Math but no change in

Language scores

▪ Effect is stronger for poorer

households

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